Looking for an Index fund? You may want to consider Fidelity Select IT Services (FBSOX) as a possible option. FBSOX holds a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
History of Fund/Manager
Fidelity is based in Boston, MA, and is the manager of FBSOX. Fidelity Select IT Services debuted in February of 1998. Since then, FBSOX has accumulated assets of about $4.22 billion, according to the most recently available information. The fund is currently managed by Daniel Sherwood who has been in charge of the fund since October of 2015.
Performance
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 18.81%, and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 25.77%, which places it in the top third during this time-frame.
When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. FBSOX's standard deviation over the past three years is 14.44% compared to the category average of 6.88%. Over the past 5 years, the standard deviation of the fund is 14.52% compared to the category average of 7.98%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. In the most recent bear market, FBSOX lost 38.77% and outperformed its peer group by 4%. This might suggest that the fund is a better choice than its peers during a bear market.
Investors should note that the fund has a 5-year beta of 1.07, so it is likely going to be more volatile than the market at large. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. FBSOX has generated a positive alpha over the past five years of 6.04, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
Expenses
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, FBSOX is a no load fund. It has an expense ratio of 0.73% compared to the category average of 0.85%. Looking at the fund from a cost perspective, FBSOX is actually cheaper than its peers.
While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.
Bottom Line
Overall, Fidelity Select IT Services ( FBSOX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Index, make sure to go to www.zacks.com/funds/mutual-funds for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.
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